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UPA communalises economy

UPA communalises economy

Author: Balbir K. Punj
Publication: Deccan Chronicle
Date: February 1, 2007

Ignoring the advice against the vivisection of developmental expenditure along communal lines, the UPA government is proposing that 15 per cent of all such expenditure, section wise, should be allotted to Muslims. It is being said that this rule would apply only in districts where there is a Muslim population of at least 25 per cent.

The rider, if any, of course, is no more than a smokescreen. For, the communal elements for whose appeasement this is being done are unlikely to be satisfied with this limit, for the simple reason that there are few districts with this high a concentration of Muslims.

The government would quietly succumb to further pressure and the 25 per cent stipulation would soon be lifted in the name of making the allotment effective across the community. After all, the Prime Minister has shocked the conscience even of his own party by stating that Muslims must have the first call on the developmental resources of the nation!

When we say that even Congressmen were shocked by the statement, it is with a full sense of responsibility. The evidence is there in the word play that the party spokesmen and the PMO went through after the statement was made, to say that the Prime Minister actually meant all backward sections including SCs, STs etc., and not Muslims alone. However, the proposal to divide development expenditure refers only to Muslims, according to news reports. Besides, if the division applies to all backward sections, it loses its edge, as the latter would mean virtually 80 per cent of the population. In any case, there are already separate boards for promoting investment in trades for SCs and STs.

Not satisfied with such abject communalisation of the economy, the Congress and the UPA are stated to be considering a separate provision for interest free loans to Muslims. The reason advanced is that Islam prohibits interest taking and, therefore, Muslims have the right to apply this to the economic area as well, just like their claim for personal law based on their scripture. This step is even more dangerous, as it would take communal division to the economic structure. To implement interest free loan, either there will have to be a separate bank for Muslims, or in existing banks there will have to be two types of banking, one with interest and another interest free.

The proponents of no-interest banking exclusively for Muslims say that this does not mean that Muslims will get loans without any obligation except repayment of the principal. The banks would claim a part of the profits from the business for which the loan was given instead of interest rate. Perhaps, they will make the bank's claim on profits out of the loan a prior charge before dividends are declared to the partners of the business or shareholders of the borrowing company. If so, in effect, the charge becomes interest.

That apart the banks would be hard put to negotiate with each borrower the share of profits to be charged in lieu of interest. This would open up a new area of corruption. Even in priority lending it is often found that the manipulation of accounts enables fraudsters to claim lower interest rates by posing as priority sector. Confusion and chaos will follow in the banking sector if the cost of borrowing or lending is to be decided by communal factors, rather than clearly definable economic criteria.

Nobody in one's senses would advocate high interest rates. Modern economics invariably favours low interest rates. In fact, it was during the permit-licence raj that prevailing interest rates rose to 18 to 25 per cent. The low interest rates of six to nine per cent were the outcome of economic liberalisation. These low interest rates had multiplier effect on the economy promoting investment and lower prices and controlling inflation to around five per cent from its double digit level of the past. But when there is excess liquidity in the economy, every central banker raises interest rates and takes other steps to siphon off this excess.

What now the Prime Minister is asking for is a banking based on so-called Islamic principles, not on the basis of economic principles. Will the government then have different types of banking - one for Hindus, another for Muslims, yet another for Sikhs, different ones for Christians, Buddhists, Jains et al? The Congress is reducing secularism to a joke, at the expense of the country.

Eminent columnist Swaminathan Aiyar has pointed out, quoting the Sachar Committee findings, that there are several economic sectors where Muslims have done well when the markets for their skills have expanded. For instance in handloom, fishery, weaving, small and large businesses, the outcome has been based on talent. Thousands of Muslim households are earning good money in these professions. Banks, for instance, have not hesitated to lend to these small and big entrepreneurs as the lenders know the quality of the borrowers.

It is a matter of pride for India that one of its richest men in business is Azim Premji of Wipro, who added a lot to his inherited wealth, and that too in a highly competitive field like software services. He never asked for any privilege on the basis of his religion. Almost the majority of front-rank film stars are inhabited by Muslims and nobody has discriminated against them because of their religion. This is true of fields like music, science (our current President, for example, was DRDO chief for long), pharmaceutical business (Hamdard, Cipla) and many other areas as well.

However, to be counted in the modern context of globalising economy, both talent and education are to be pursued doggedly. All the banks in the world together cannot help someone who refuses modern education and constantly looks back at the past with romantic eyes. To take full advantage of the opportunities offered by a diversified modern economy, social restructuring needs to follow economic change closely.

If social restructuring does not support such change, no amount of reservation can help. The secularists have, for ages, supported those powers within the Muslim community that resist social restructuring or reform, thereby creating a vested interest in the community's backwardness. Now they are seeking to maximise this situation for their own selfish ends.

It is a pity that the economist in Dr Manmohan Singh is getting submerged by the politician in him. It is said that good economics is also good politics. But here a deadly combination of bad politics and bad economics is threatening to drag the country down the slippery path.

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